Can We Put Inflation Fears to Rest as Rates Drop Globally?
Inflation fears plagued the global economy for the last few years. The data may be able to tell us if it is time to stop worrying.
In 2022, global inflation rose to an astonishing 8.8% in July, which is as high as the global inflation percentage has moved since the middle of the 1990s. This was primarily due to coronavirus-related factors, such as business shutdowns, supply shortages, and global restrictions on movement and business operations.
Mongolia had some of the highest inflation in the world, at 14.8%, with Hong Kong experiencing the lowest in 2022, at only 1.9%.
In 2023, inflation dropped to 6.6% at its peak for that year, and by 2024, the numbers had fallen to 4.3%. Before the coronavirus pandemic hit, global inflation was at 3.5%, so global economies still have a way to go, but progress is being made.
In fact, we have seen a downward progression of inflation since the middle of 2022, though that has not always been a consistent progression. Estimates from global inflation for the end of 2024 put it at about 3%.
Headline VS Core Inflation
These numbers are all for core inflation, which looks at the housing market and the prices of electronics, medicine, and transportation. Headline inflation is a raw, unfiltered metric that includes all of the data from core inflation as well as data of the cost of energy (including gas and oil) and food. Headline inflation is currently at 6.8% and is expected to fall to 5.8% in 2024.
Headline inflation tends to be higher than core inflation, which is why this number is less commonly reported when talking about how good the economy is looking.
Global Comeback
The global economy is recovering, and the International Monetary Fund predicts that global growth is expected to examine at a 3.1%, which is not terrible and does show indications of a global economy in recuperation.
In many areas of the world, global inflation is dropping faster than expected. In others, it is being kept in check by a strong stance against interest rate cuts, particularly in England and the United States.
By all appearances, global inflation is going down and staying down. It should continue to drop according to the data we have seen as world economies keep making slow progress back to pre-pandemic levels.
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